Rents set to rise as housing market softens
9:00AM Tuesday December 04, 2007
Rents could rise 6 per cent a year, creating a new source of inflation, Westpac economists suggest.
Westpac said rents had been subdued for years, rising at an average rate of just 2.2 per cent a year over the past four years.
It expected rents would accelerate rapidly by 6 per cent per annum and would stay that high for five years, creating inflationary pressure.
One of the reasons for this was increased demand for rental housing.
"High interest rates will reduce supply," it noted. "With mortgage rates above 9 per cent, rental yields at 4 per cent and little prospect of capital gain, the numbers just do not stack up for landlords."
More
here